Learning to Think Smaller

By James Kelly

States and localities gear up to cope with federal slashes

As some 400 New England state officials listened glumly in a lecture hall at the University of Massachusetts' Boston campus last week, an official of the U.S. Department of Health and Human Services droned on in a tongue known only to career bureaucrats, a patois of federal title numbers, "transmittals" and agency acronyms. The meeting was the first of eight regional briefings by the White House's Office of Management and Budget to explain the Reagan Administration's new block-grant program. The plan lumps together funds for some three dozen social service, education and community-aid programs into nine block grants that states will now, within certain guidelines, be able to spend as they see fit. If the meeting's language was arcane, the message was simple: as approved by Congress last July, the block-grant plan will cut federal funding for those programs by 25%, and leave it up to local officials somehow to cope. Predicted Massachusetts State Senator Jack H. Backman at the meeting: "There will be a great deal of human misery."

Though the cuts will not take effect until Oct. 1, many states and counties are drawing up plans to slash social services or up taxes--or both. The cuts come at a time when state coffers have already been drained by unemployment, which has diminished revenues from sales and income taxes, and by inflation, which has sent costs skyrocketing. "The situation was already grim," says Dave Willis, a California state finance officer. "The federal cuts just compound our problems."

Worse yet, no one knows exactly what the impact of the federal budget cuts will be on social services. Congress has yet to agree on the specifics of the appropriations bills. Meanwhile, Administration officials are being maddeningly vague on how the funds will be distributed and what guidelines must be followed. State officials are busy poring over mounds of memorandums, trying desperately to divine exactly what is in store for their states. Says Dick Chady, spokesman for the New York State department of social services: "I've got a mountain of paper two feet high. You would think that this whole thing is a plot by Xerox."

Indeed, not a single state has notified Washington that it is ready to accept the block grants, and many will not be ready by the time the funds start flowing this fall. Says Lou Glasse, director of New York State's office for the aging: "Each state is acting almost to invent its own wheel." Yet some local budget chops are beginning to become painfully clear. States in the Northeast and Midwest will probably be forced to cut social services most severely, since these states tend to spend more on the needy than Sunbelt states and are not so prosperous. In New York's Monroe County, for example, officials have already cut off funds for a treatment program for child abusers, and in Massachusetts, Human Services Secretary William T. Hogan has announced he will reintroduce a program of mandatory, nonpaying public service jobs for welfare recipients. In Kentucky, some 26,000 residents who now receive $200 a month in aid to families with dependent children will lose that monthly check. Faced with a $7 million loss in Medicaid funds, Connecticut is unlikely to continue helping cover the costs of eyeglasses and prosthetic limbs. Says a spokesman for the state office of policy and management: "A lot of things that have been taken for granted are just going to disappear."

Many states will cut back on Medicaid, since that is the program with the highest federal contribution, 16%. The Reagan budget reduces Medicaid contributions to the states by 3% in fiscal 1982. In Illinois, officials have trimmed reimbursements to hospitals for treating Medicaid patients by $130 million. Private hospitals in Illinois are trying to duck the added costs of caring for Medicaid patients by transferring them to public hospitals. At Cook County Hospital in Chicago, for example, transfers have jumped from 137 patients in July 1980 to 363 this past July. "We are caught in a vise," complains Director Elliott Roberts. "We can't turn patients away, but the Federal Government is backing away."

Even states that boast bulging coffers seem reluctant to lay out more money for social services: though Texas will end this fiscal year with an estimated $300 million surplus, the state's department of human resources plans to meet an estimated $31 million cut in federal funds by slashing family-planning programs, emergency care for battered wives and protective services for abused children.

Some localities are spared the pain of cuts now by having assiduously avoided depending on federal handouts for day-to-day operations. In Summerville, S.C. (pop. 6,300), for example, the town received $200,000 of their $1.4 million budget from Washington last year. They promptly spent the money not on operating costs but on new police, fire and sanitation equipment. Says Town Administrator John F. Wilbanks: "We decided long ago we weren't going to rely on the Federal Government to pay for this town precisely because what they give us they could just as easily take away."

But Summerville is a notable exception, and asking most state and local officials how they feel about the social service cutbacks is akin to asking pigs how they feel about bacon. Still, it is rather surprising that the squeals of protest from those most likely to be affected by the slashes in social services have been so muted. "In the late 1960s, talk about reducing social services brought out marchers," says Gabriel Russo, commissioner of human services for New York's Monroe County. "I don't see anybody stirred up now." The utter confusion over the cuts, no doubt, is working to the Administration's advantage. Observes Roger Herr, chief of Iowa's financial assistance bureau: "There are a lot of families that just don't understand the changes that are coming down the pike."

--ByJames Kelly. Reported by Barbara B. Dolan/New York and J. Madeleine Nash/Chicago, with other U.S. bureaus

With reporting by Barbara B. Dolan/New York, J. Madeleine Nash/Chicago

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